The government must face the reality that the economic model of an oversized City is fundamentally broken
While millions of households struggle with soaring costs and the government rejects any demands for pay rises, the bankers’ bonuses are back, alongside plans to unleash City bosses’ pay as part of a post-Brexit deregulation agenda, much like the one that paved the way to the 2008 financial crash. Under the guise of “international competitiveness”, the City and the government are seeking to double down on a finance-led economy that serves global financial markets rather than supporting communities and the green transition.
In June, the then Treasury minister John Glen outlined his vision for an “advanced financial services sector that is globally competitive”, starting with plans to introduce a new competitiveness objective for regulators. The new chancellor, Nadhim Zahawi, is expected to showcase this vision for financial regulation in his speech to bankers at a lavish dinner at Mansion House tonight, before introducing legislation to parliament tomorrow. Despite the Tory leadership turbulence, it seems that whichever combination of prime minister and chancellor takes over, they will firmly support the City. The reason the finance industry has spent a decade lobbying for this is so it can argue that all the activities it does in the name of profit are to increase international competitiveness – think mortgage mis-selling, money laundering and excessive risk-taking. We only have to turn the clock back to 2008 to see what chasing the “competitiveness” of the finance sector does to our economy.